Key stock market indicator hits new high on market strength

MAAD & CPFL Review

 

Market Snapshot for session ending 09-04-13
 

Last

Day Change

%Change

S&P 500 Index

1653.08

+13.31

+.81%

Dow Jones Industrials

14930.87

+96.91

+.65%

NASDAQ Composite

3649.04

+36.43

+1.01%

Russell 2000 Index

1025.58

+9.32

+.92%

Minor Cycle* (Short-term trend lasting days to a few weeks) Negative / Neutral

Intermediate Cycle* (Medium trend lasting weeks to several months) Neutral

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • Major indexes rallied marginally Wednesday. Biggest gainer was NASDAQ Composite. NYSE advance/decline line stats were positive by 2.43 with NYSE up/down volume positive by 3.68 to 1.
  • Market volume rose a little under 1%.
  • Short-term trend remains negative, but S&P 500 continues to close in on upper edge of 10-Day Price Channel (1654.62 through Thursday). Intermediate Cycle, as measured by lower edge of 10-Week Price Channel (1638.33 through September 6) is in jeopardy.
  • Our VIX-based short-term volatility indicator rose to 23% Wednesday (18.7% Tuesday) to suggest slightly more positive flavor to market. At June 24 Minor Cycle low VBVI was at 22%.
  • Daily MAAD was big news Wednesday in that indicator rallied to new high to eclipse previous high made August 14. Eighteen issues were higher with 2 lower. Daily MAAD Ratio was marginally “Overbought” at 1.29.
  • Daily CPFL, on flip side, was negative by 2.71 to 1, sank to new short-term lower, and was slightly below uptrend line stretching back to October 2011. Daily CPFL Ratio remains “Oversold” at .55.

Market Overview – What We Think:

  • Strength by Daily MAAD to new high Wednesday makes market environment more interesting considering fact NYSE a/d and NYSE up/down volume lines remain weak while continuing to hold well below August price highs that neither confirmed.
  • While MAAD includes NASDAQ Composite transactions, strength of indicator is not merely reflection of COMPX strength compared to SPX and Dow 30. Could be that MAAD is better measuring Smart Money tendencies, fact that market is in vicinity of yet another short-term low, and that new highs could follow.
  • Considering MAAD strength, extent to which any short-term advance plays out relative to August highs (1709.67—S&P 500) will determine staying power of larger Intermediate Cycle in effect since last November 16.
  • A number of things are weighing in favor of higher prices on Minor Cycle including failure of short-term Momentum to make new lows, “Oversold” price-based short-term oscillators, our VIX-based volatility indicator turning higher from near-term zone of opportunity, and bullishness in MAAD.
  • Negativity and new short-term low by CPFL is an outlier

Index Price Channel Stops (10-Bar MAs of Highs/Lows ) Weekly Monthly
 

9/2

9/3

9/4

9/5

9/6

9/6

9/30

S&P 500 Index

BUY 1665.17

BUY 1661.92

BUY 1657.40

BUY 1654.82

BUY 1651.69

SELL 1638.33

SELL 1448.73

Dow Jones Industrials

BUY 15085.99

BUY 15044.12

BUY 14999.46

BUY 14974.28

BUY 14944.36

BUY 15451.27

SELL 13465.21

NASDAQ Composite

BUY 3647.50

BUY 3644.06

BUY 3637.62

BUY 3637.80

BUY 3635.26

SELL 3485.26

SELL 3044.23

Value Line Index

BUY 3898.45

BUY 3895.81

BUY 3883.73

BUY 3877.96

BUY 3871.23

SELL 3773.80

SELL 3180.51

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

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